Tyler Cowen on Government and Public Goods

In a New York Times column, libertarian economist Tyler Cowen argues that the government should provide more public goods, including rewards for medical research, patent buyouts, and pandemic preparation.

A public good is a good characterized by non-excludability--once produced, it is difficult or impossible to exclude people from consuming it. In contrast, a private good is characterized by excludability. An example of a private good is Medicare, since the benefits can be limited to particular people. An example of a public good is a public health measure which reduces the risk of infection with a given disease to the members of a given population. Even vaccines, which can be given to particular people, have positive externalities, in that they reduce the risk of infection for others who are not vaccinated, and so they count as public goods.

It may seem surprising that a libertarian is arguing for more government production of public goods, and in a sense that is right given the current culture of 'libertarianism' in America, but in fact the libertarian or classical liberal ideology has included the view that the proper role of the government is to produce public goods and not private goods. The point is not made enough that, even from a libertarian standpoint, governments may fail by not doing enough, as well as failing by doing too much or engaging in activities which should be left to civil society. To my mind, another salient example of insufficient government action is prosecution of financial fraud and "white collar" crime.